Week in Review

People either loved Margaret Thatcher. Or they hated her. And it all came down to their political ideology. If you were pro-capitalism you loved her. If you preferred socialism you hated her. And the biggest socialist to hate her (and her friend Ronald Reagan) was the Union of Socialist Soviet Republics (USSR). Not only did the success of her economic policies make the failure of the Soviet economic policies stark by comparison she was outspoken about her hatred of communism. Even allowed her good friend, Ronald Reagan, base American nuclear cruise missiles on British soil.

Capitalism’s victory over Soviet socialism was so apparent that Mikhail Gorbachev opened dialogue with the Great Margaret Thatcher. Ultimately bringing about the Soviet’s defeat in the Cold War. Because socialism as an economic system doesn’t work. Which is why Britain soared to new heights under the capitalist policies of Margaret Thatcher. While the Soviet Union collapsed under their socialist policies. And she entered office when Britain was at its worst (see To blame Margaret Thatcher for today’s problems is to misunderstand history by Allister Heath posted 4/9/2013 on The Telegraph).

[Margaret Thatcher] inherited a basket case of an economy, crippled by obsolete state-owned firms, a legacy of decades of poor policies. Management was insular and demoralised, the workforce used as pawns by militant union leaders who would call strikes at every opportunity, customers treated like dirt and production techniques stuck in the past.

Productivity was appalling, overmanning the norm and the quality of UK-made goods notoriously poor. Britain was sclerotic, anti-entrepreneurial and anti-innovation, often specialising in industries with no long-term future.

Yet it is a little-known fact that manufacturing output actually went up during her time in office, despite the necessary liquidation of so many unviable plants.

This was basically the problem they were having in the Soviet Union. Everything was state-owned. Production techniques were stuck in the past. No one clamored to get their hands on good Soviet products. Because there were no good Soviet products. And they had far too many workers in their plants building stuff no one wanted. While store shelves sat empty and people went without the basic necessities. Britain was far along the path to outright socialism. While Soviet Union was nearing the end of that path. Margaret Thatcher turned the country around before they could end up where the Soviet Union was. And the sun began to shine once more on the British Empire. Albeit a smaller one.

Output had grown another 4.9pc by the start of 1997, when the Tories were booted out. Given the bitterness of the 1980s’ recession, caused by the desperate need to wring out extreme levels of inflation from the system by using high interest rates, it shows just how effective her supply-side reforms turned out to be…

…She was right to slash income tax, to repeal capital controls and to shake up the City of London with Big Bang. Most of her reforms to retail banking, including allowing banks and building societies to compete with one another, were spot-on.

There were some bad changes, however, though not the ones usually cited: still-high inflation made the ultra-safe saving banks unviable, especially after the EU forced the UK to introduce retail deposit insurance in 1979; there was a counter-productive move away from individual responsibility in retail financial services; and the UK signed up to the Basel Accords in 1990, a flawed international system to regulate banks that triggered all sorts of dangerous unintended behaviour and ensured financial institutions retained far too little reserves. In all cases, however, these were changes that didn’t really follow her basic philosophy…

Thatcherism was about choice, individual responsibility and independence from the state, not the politicised, artificially pump-primed markets we ended up with by the mid-2000s. She hated bail-outs, government subsidies and nationalisations; and would have looked on in horror at the gradual socialisation of losses and privatisation of profit in the financial services industry in the 15 years running up to the crisis.

Starting with the rescue of the LTCM fund in 1998 in New York, regulators decided that no large financial institution could ever fail. Alan Greenspan saw himself as an economist-king, manipulating interest rates to bolster financial markets and ensure perpetual growth, and triggering a giant bubble that burst twice. This was corporatism, not genuine capitalism.

Under the new order, including Gordon Brown’s late, unlamented Financial Services Authority, banks were disciplined neither by the free market – the authorities were there as a backstop, so there was no chance of going bust – nor by regulators, who allowed risk to build up unchecked. Greed was no longer balanced out by fear; moral hazard had replaced prudence. Thatcher, the grocer’s daughter and keen student of F.A Hayek, would have despaired.

A genuinely Thatcherite government in the 2000s is unlikely to have tolerated the explosion in the money supply – and house price madness – that Brown allowed, not least because Lord Lawson made a similar mistake in the late 1980s when he was Chancellor, triggering an earlier, disastrous house price bubble and bust. The parallels between the two episodes are striking but bizarrely uncommented upon.

So it is silly to blame Thatcher for today’s problems. If only one of her disciples had been in power in the 2000s, we wouldn’t be in anything like the mess we are in today.

Supply-side reforms? Those were the same kind of reforms that her good friend, Ronald Reagan, favored. And by using them he undid the Keynesian damage of his predecessors (LBJ, Nixon, Ford and Carter). Pulling the United States off the path towards socialism. Long before they got where Britain was before Thatcher. But like in Britain it didn’t take long to return to the failed policies of the past. The Keynesians returned in full force. Playing with interest rates. Keeping them artificially low to interfere with market forces. Causing great irrational exuberance. Those famous words uttered by Alan Greenspan. An irrational exuberance his Federal Reserve policies enabled. Allowing people to borrow cheap money to invest with abandon. With no fear of the economic fallout. Pure Keynesian economics. This wasn’t capitalism. For capitalism would have raised those interest rates before they created such great bubbles. And capitalism would have disciplined those free markets. By checking greed with fear and having serious consequences for irrational exuberance. Not government bailouts.

If Thatcher and Reagan were in office in the past decade things would be a lot better now. And the simple proof of that is that when we moved away from their policies we created the mess we have today.

It is a sad day. One of the greatest world leaders of the 20th century has passed. The great Margaret Thatcher. The Iron Lady. Who saved Great Britain. And made it great again. By championing conservatism over socialism. Who dared to stand strong against the Soviet Union. Rejecting détente. For she hated communism. Her actions, along with those of her good friend American president Ronald Reagan, made the world a better place. Few were hated more. Because she dared to stand on principle. And fought back when challenged. Something unheard of these days. The world needs more Margaret Thatchers. And far less of what we have.

Let’s us pray we don’t soon forget what she did. And let not the revisionists disgrace her legacy. God bless the good lady. We thank you for your service. And wish you everlasting peace.

Week in Review

The British Left hates Margaret Thatcher. So much that they are already selling t-shirts celebrating her death. Though she is still alive. For she is the Ronald Reagan of Great Britain. A singularly remarkable person who came along just in time to save a nation in decline. And restore it to greatness (see The Left hates Margaret Thatcher because she reminds them they are wrong about everything by Daniel Hannan posted 9/12/2012 on the Daily Mail).

Now and again, we are reminded of the sheer nastiness of a certain kind of Leftie. Not, let me stress, all Lefties: I have Labour friends who are motivated by a more or less uncomplicated desire to help the disadvantaged.

But they march alongside some committed haters who define their politics not by what they like, but by what they loathe. They also define opponents not as human beings with whom they disagree, but as legitimate targets.

A lack of empathy, bordering almost on sociopathy sits behind their talk of caring and sharing.

Not much different from the American Left. Who hate their political opponents. And attack them personally. With no understanding of the underlying policy in question. For they never say they prefer tax, borrow and print (money) Keynesian economics over a more Austrian approach of sound money and low taxation. The kind of policies that have made great economies great. Instead they say their opponents hate women, hate poor people, hate children, hate seniors, etc. And yet they are the tolerant people. Who tolerate everyone that agrees with them. And hates all those who disagree with them. Making these tolerant some of the most intolerant of people. Which is why they hate Ronald Reagan in America. And they hate Margaret Thatcher in Britain. Even though they both returned their countries to prosperity after a decade of decline and despair.

I am just old enough to remember the end of the Seventies: power cuts, three-day weeks, constant strikes, price and income controls, inflation.

Worst of all, I remember the sense of despair, the conviction that Britain was finished.

I don’t believe you can grasp Margaret Thatcher’s achievement without the context of what she displaced.

Throughout the Sixties and Seventies, this country had been outperformed by every European economy. ‘Britain is a tragedy — it has sunk to borrowing, begging, stealing until North Sea oil comes in,’ said Henry Kissinger.

The Wall Street Journal in 1975 was blunter: ‘Goodbye, Great Britain: it was nice knowing you.’

Margaret Thatcher’s victory in 1979 was like a thaw after the cruellest of winters. Inflation fell, strikes stopped, the latent enterprise of a free people was awakened.

Having lagged behind for a generation, we outgrew every European country in the Eighties except Spain (which was bouncing back from an even lower place). As revenues flowed in, taxes were cut and debt was repaid, while public spending — contrary to almost universal belief — rose.

In America we were mired in stagflation and a record high misery index of the Carter Seventies. Much of which he inherited from LBJ’s Great Society and Richard Milhous Nixon’s abandoning of the quasi gold standard. The Nixon Shock. Because he refused to cut Great Society spending. As did Gerald Ford. As did Jimmy Carter. No one wanted to cut back spending and continued to print money to pay for the Great Society spending causing the record high inflation during the Seventies. Which added to the high unemployment that gave Jimmy Carter that horrible misery index. And malaise. Like Daniel Hannan I’m just old enough to remember how bad it was in the Seventies. And how great Ronald Reagan’s Morning in America was. We were better off after 4 years of Ronald Reagan than we were after 4 years of Jimmy Carter. And the numbers proved it. Lower tax rates increased tax revenue. Allowing even greater government spending. Which was the source of the Reagan deficits. Not the tax cuts.

In the Falklands, Margaret Thatcher showed the world that a great country doesn’t retreat forever.

And by ending the wretched policy of one-sided detente that had allowed the Soviets to march into Europe, Korea and Afghanistan, she set in train the events that would free hundreds of millions of people from what, in crude mathematical terms, must be reckoned the most murderous ideology humanity has known.

Margaret Thatcher and Ronald Reagan stood together against communism. While Jimmy Carter eroded America’s military power so much that the Soviets actually put together a nuclear first-strike doctrine. For unlike the policy of Mutual Assured Destruction (MAD) of previous administrations the Soviets believed they could launch and win a nuclear war against Jimmy Carter. Reagan and Thatcher rebuilt and deployed nuclear and regular military forces to reduce the threat of a Soviet first-strike. And made the enemies of Great Britain and the United States fear and respect our military might. It was peace through strength. For all free and democratic countries. Not the detente of Jimmy Carter that encouraged the Soviets to add a nuclear first-strike doctrine. The beginning of the end of the Cold War began under Thatcher’s and Reagan’s watch.

Why, then, do Lefties loathe her so much..?

No, what Lefties (with honourable exceptions) find hard to forgive is the lady’s very success: the fact that she rescued a country that they had dishonoured and impoverished; that she inherited a Britain that was sclerotic, indebted and declining and left it proud, wealthy and free; that she never lost an election to them.

Their rage, in truth, can never be assuaged, for she reminds them of their own failure.

The same reasons the American Left hates Ronald Reagan. Because he, too, returned his country to greatness.

Week in Review

So far the Keynesian advice has been consistent to get us out of these financial difficult times. And wrong. If you want proof look at Sweden. When the Keynesians said stimulus the Swedes did instead something wholly anathema to Keynesians. They cut taxes. And guess what? They don’t have a debt crisis. How about that? But wait. It gets better. They no longer have a deficit (see Sweden’s Finance Minister Helped Cut The Deficit — By Cutting Taxes by Adam Taylor posted 4/20/2012 on Business Insider).

With the Swedish deficit wiped out last year (and Borg’s Conservatives voted back into power) the decision is now looking increase wise.

“Everybody was told “stimulus, stimulus, stimulus”,” he tells Fraser. “It was surprising that Europe, given what we experienced in the 1970s and 80s with structural unemployment, believed that short-term Keynesianism could solve the problem.” Non-economists, he says, “might have a tendency to fall for those kinds of messages”.

Instead, Borg cut taxes in a bid to lure entrepreneurs, and lowered benefits to make up the difference. Entrepreneurs “are the source of job creation,” says Borg.

The history is all there to see. Keynesian economics failed in the Seventies. Absolutely. But those who thought like Anders Borg, Margaret Thatcher and Ronald Reagan, did what he did in the Eighties. Thatcher turned the UK around. And Reagan turned the U.S. around. Pity no one remembers history these days. Other than Sweden’s Finance Minister.

A conservative in Sweden? Who would of thunk it? If only Europe and the United States would follow Sweden’s lead then they, too, could have smaller deficits. And more prosperous economies. But, alas, they simply can’t put their people before their politics. Apparently.

Week in Review

The great Margaret Thatcher was a limited-government conservative. She brought the UK back from the abyss of socialist malaise. Fixed the economy. Gave the people a life of plenty. And good times. The last Soviet leader, Mikhail Gorbachev, visited Margaret Thatcher. He was impressed. The people in the UK weren’t hungry. He asked her how she did it. How was she able to feed her people? For in the Soviet Union this was a never ending crisis. Growing enough food on their collective farms to feed their people.

An odd question for Thatcher. Or any other capitalist. Because elected leaders of capitalistic countries don’t feed their people. The free market economy does. And it does it very well. For the Soviets had the breadbasket of Europe within her borders. The Ukraine. And the UK was but a tiny island nation. With barely a fraction of the farmland as the breadbasket of Europe. Yet the British could feed her people. And the Soviets could not. Which just goes to show you that planned economies are all well and good if you want to control and oppress your people. But they’re abject failures if you want to feed your people. Still, there are those who still believe in the folly of central planning (see Durbin knocks GOP for not ‘designing the economy’ by Joel Gehrke posted 10/29/2011 on The Washington Examiner).

Despite the demonstrable failure of the bank bailouts, the 2009 stimulus, and the federal loan program that produced the Solyndra scandal, Democrats still believe that Congress should play a major role in shaping the economy — with the help of expert planners, of course.

Senate Majority Whip Dick Durbin, D-Ill., acknowledged as much while offering a misguided rebuke to congressional Republicans. “Simply standing back while trying to design the bumper sticker for the 2012 election instead of designing the economy to put Americans back to work,” Durbin said during an interview with the Chicago Tribune, “is not what the American people are looking for.”

The Democrats took both the House and the Senate in the 2006 midterm elections. They held that power until the Republicans took back the House in the 2010 midterm elections. They had 4 years of full legislative control. And what designing of the economy did they do? Just the destructive kind.

The housing bubble blew up on their watch. And the fallout, the subprime mortgage crisis, happened on their watch. The Great Recession happened on their watch. The bank bailouts, the stimulus and the federal loan program that produced the Solyndra scandal happened on their watch. And if that wasn’t enough destruction, they unleashed the job-killing, economy killing, private health care insurance killing Obamacare. And they wonder why the economy isn’t doing any better.

No, Senator Durbin. We don’t need any more of your expert planning. Anymore and I’m afraid you guys will do some damage that not even a Margaret Thatcher can fix.

The Corporation was Created to Raise Capital and Manage Risk so they can Build the Stuff we Want

No wonder the Occupy Wall Street people have their heads filled with nonsense. Here’s an Ivy League publication that doesn’t even understand what a stakeholder in a corporation is. They have a stake, i.e., a share. They own stock. They’ve risked their capital. And if you don’t risk capital, then you’re just not a stakeholder (see Occupy Wall Street: What Businesses Need to Know by Hari Bapuji and Suhaib Riaz posted 10/14/2011 on the Harvard Business Review).

The demonstrators are asserting that they are stakeholders in American business, and they’re correct — they are stakeholders, as consumers, as employees, and as citizens affected by the financial system in general.

No they’re not. Unless they bought stock in these corporations. Which I doubt, because people typically don’t protest against companies they invest in. Unless they’re idiots.

The corporation was created to raise large amounts of capital. And manage risk. By selling stocks to shareholders. So they can raise the money to build the stuff we want. Things that hopefully would make a profit one day. A profit that the shareholders would share in. As they are the ones taking the BIGGEST risk. The corporate officers of these corporations have a fiduciary responsibility with the shareholders. To make a profit. It’s their company. They paid for it. And these shareholders owe nothing to that mob on Wall Street. Unless any of them own stock.

You’d think those writing for a business school would understand basic business 101.

Businesses should look at whether existing models of compensation are contributing to this inequality. They need to find ways to reward performance without increasing pay disparities. Developing new models of compensation and governance is not easy and can only be possible through a long-term and sincere engagement with a wide set of stakeholders, such as regulators, academics, and representatives of workers.

They want to do away with merit. And introduce something more akin to communism. Where everyone is equal. No matter the value of their work. People have tried this. In North Korea. Cuba. And the former Soviet Union. Note the word ‘former’ in that last one. There’s a reason why it’s former. No one wanted to do the harder jobs if they didn’t get paid any more for the additional brain power or risk. And those stuck carrying the weight of their comrades? They just didn’t bust their ass in the process. And that’s why the Soviet Union is a ‘former’ union.

But this is what the Occupy Wall Street people want. Force people to do those harder jobs. But pay these wealth creators no more than them. Even if they only work at a Starbucks. Or collect government assistance.

The Egalitarian Polices of the Great Society Destroyed the Economy in the Seventies

So an Ivy League publication doesn’t understand business. But you know who does? Al Jazeera. Their conclusions are all wrong but at least they get a lot of stuff right along the way (see The instability of inequality by Nouriel Roubini posted 10/14/2011 on Al Jazeera).

While these protests have no unified theme, they express in different ways the serious concerns of the world’s working and middle classes about their prospects in the face of the growing concentration of power among economic, financial, and political elites. The causes of their concern are clear enough: high unemployment and underemployment in advanced and emerging economies; inadequate skills and education for young people and workers to compete in a globalised world; resentment against corruption, including legalised forms like lobbying; and a sharp rise in income and wealth inequality in advanced and fast-growing emerging-market economies.

Of course, the malaise that so many people feel cannot be reduced to one factor. For example, the rise in inequality has many causes: the addition of 2.3 billion Chinese and Indians to the global labour force, which is reducing the jobs and wages of unskilled blue-collar and off-shorable white-collar workers in advanced economies; skill-biased technological change; winner-take-all effects; early emergence of income and wealth disparities in rapidly growing, previously low-income economies; and less progressive taxation.

American industry is uncompetitive. That appears to be the problem. That’s why there are fewer jobs. So people who earn income via their labor are being priced out of the market by their generous pay and benefit packages. But people who earn their income via capital always have a place to invest capital. Capital is capital. It is always competitive. That’s why more wealth is accumulating to the rich. Because they haven’t killed their golden goose. Like unions have killed unskilled American manufacturing.

This doesn’t explain those kids on Wall Street, though. The ones with college degrees. Their problem is their degrees. Many of them are worthless. Probably a lot of English majors out there. Or have degrees in sociology. Anthropology. Philosophy. Women studies. Etc. But there just aren’t a lot of stores out there selling this stuff.

The increase in private- and public-sector leverage and the related asset and credit bubbles are partly the result of inequality. Mediocre income growth for everyone but the rich in the last few decades opened a gap between incomes and spending aspirations. In Anglo-Saxon countries, the response was to democratise credit – via financial liberalisation – thereby fuelling a rise in private debt as households borrowed to make up the difference. In Europe, the gap was filled by public services – free education, health care, etc. – that were not fully financed by taxes, fuelling public deficits and debt. In both cases, debt levels eventually became unsustainable.

Too much debt is never a good thing. But those bubbles weren’t the result of inequality. They were the result of trying to make everyone equal. Extending credit to the credit unworthy. Putting people into houses who had no business owning a house. That was the fault of irresponsible government policy. Not inequality. Just like the free education, health care, etc. We didn’t have these problems when those things weren’t free. And when only people who could qualify for a mortgage were getting mortgages.

The problem is not new. Karl Marx oversold socialism, but he was right in claiming that globalisation, unfettered financial capitalism, and redistribution of income and wealth from labour to capital could lead capitalism to self-destruct. As he argued, unregulated capitalism can lead to regular bouts of over-capacity, under-consumption, and the recurrence of destructive financial crises, fuelled by credit bubbles and asset-price booms and busts.

Karl Marx was wrong. At least, he hasn’t been proven right yet. And many have tried. The Soviets. The Chinese. The North Koreans. The Cubans. Marxism has been an abject failure. And those busts were made worse by monetary policy trying to eliminate them. If credit wasn’t so cheap and mortgage standards weren’t so low there would have been no housing bubble. It was government policy that encouraged people to accumulate debt. Not inequality. Government is just bad at running things. Which is why Marxism has been an abject failure.

Thus, the rise of the social-welfare state was a response (often of market-oriented liberal democracies) to the threat of popular revolutions, socialism, and communism as the frequency and severity of economic and financial crises increased. Three decades of relative social and economic stability then ensued, from the late 1940’s until the mid-1970’s, a period when inequality fell sharply and median incomes grew rapidly.

Some of the lessons about the need for prudential regulation of the financial system were lost in the Reagan-Thatcher era, when the appetite for massive deregulation was created in part by the flaws in Europe’s social-welfare model. Those flaws were reflected in yawning fiscal deficits, regulatory overkill, and a lack of economic dynamism that led to sclerotic growth then and the eurozone’s sovereign-debt crisis now.

Government spending exploded during the Sixties. They printed so much money in the Seventies to pay for the obligations of the Sixties that Nixondecoupled the dollar from gold. So he could print more money. Giving us record high interest rates. And record high inflation. Weak GDP. And high unemployment. This was all because of the egalitarian polices of the Great Society. They destroyed the economy in the Seventies. Reagan and Thatcher brought back prosperity. By stopping the insanity. They cut taxes. Cut regulation. And the economy took off. It’s the reversal of the Reagan-Thatcher policies that are returning the economy to the malaise of the Seventies. Both in the UK. And the USA.

In the Soviet Union all of the Good Stuff came from the Decadent, Capitalist West via the Black Market

But this socialist/communist claptrap is what they’re teaching in American universities. These protestors don’t understand the role of capital in the modern economy. The entrepreneurial spirit. Risk management. They don’t understand anything other than that they weren’t born into privilege. And this just pisses them off (see OWS’ Program? Distract From Dems’ Failures by Charles Krauthammer posted 10/14/2011 on Investors.com).

These indignant indolents saddled with their $50,000 student loans and English degrees have decided that their lack of gainful employment is rooted in the malice of the millionaires on whose homes they are now marching — to the applause of Democrats suffering acute Tea Party envy and now salivating at the energy these big-government anarchists will presumably give their cause.

Except that the real Tea Party actually had a program — less government, less regulation, less taxation, less debt.

It’s ironic that that they hate corporate America but love to indulge in their products.

During the Cold War. When there was full employment behind the Iron Curtain. In the tractor factories. People stood in line all day to buy soap and toilet paper at reasonable prices. But they bought Levi’s on the black market. And anything else they wanted that wasn’t dreary and drab. Or scratchy and caustic. Whatever the price. Why? Because all of the good stuff came from the decadent, capitalist West.

These protestors need to read a little history of what it was like when there was true egalitarianism. It sucked. That’s why Soviets defected to the U.S. And Americans didn’t defect to the U.S.S.R. Because capitalism was better. People lived better under capitalism than they did under communism.

The President of the United States should not use the Risk of Civil War as a Reelection Strategy

As Krauthammer says in his column, this Occupy Wall Street movement has political motives. Obama is following in the shoes of Jimmy Carter. The economy is in the toilet. His policies have all failed. And he has no chance of reelection based on his record. So he is using the class warfare card. Which is irresponsible. And dangerous.

Obama is opening a Pandora’s box. Popular resentment, easily stoked, is less easily controlled, especially when the basest of instincts are granted legitimacy by the nation’s leader.

Mobs are easy to create. But they take on a life of their own. Are dangerous. And unpredictable. The president of the United States should not use the risk of civil war as a reelection strategy. Because it’s not exactly constitutional. Or in keeping with the oath of office he swore.

To be Great be like Margaret Thatcher and Ronald Reagan

People have said that the British and the Americans are one people separated by a common language. We’re very similar. Even if we speak the Queen’s English a bit differently. It turns out that’s not the only thing we share. We also bend over backwards to compare ourselves with great conservatives from our past (see Look at what the Conservatives are achieving by Michael Fallon, MP for Sevenoaks and deputy chairman of the Conservative Party, posted 3/2/2011 on the UK’s Telegraph).

Yes, Thatcher abolished the dock labour scheme – 10 years after she was elected. Yes, she tackled trade union power: they finally lost their closed shop in 1988, nine years after she started. Yes, she set up grant-maintained schools, independent of local authorities. But when we left office, they comprised less than 5 per cent of the country’s total.

David Cameron’s Government has moved further and faster. Take the public finances: public borrowing, cyclically adjusted, will be 0.3 per cent of GDP by 2015, well below the 2.6 per cent it was in 1990, and the budget will be back in surplus. Corporation tax was 34 per cent when Thatcher left office; by 2015 it will be 24 per cent. Small business tax, 25 per cent in1990, will have fallen to 20 per cent.

Not only is David Cameron Thatcher-like, he’s even out ‘Thatchered’ her. This speaks volumes about the greatness of Margaret Thatcher. In America, it’s the other half of that dynamic duo. Ronald Reagan. Come election time, every candidate is trying to show how Ronald Reagan he or she is. Even the Democrats. Even Barak Obama as his poll numbers plunge.

For a first-term prime minister leading an entirely novel coalition, the essential tasks might be enough: growing the economy; weaning it off its over-reliance on public spending, financial services and an unsustainable property boom; and pulling our finances back from the brink over which Greece and Ireland plunged.

Yet far more significant is the quiet revolution that is turning government inside out – away from Whitehall and targets and regional authorities and back to councils, GPs, head teachers, police commanders, community groups and charities. Ending the state monopoly in almost all public services, encouraging new providers, ensuring competition and choice – these are the most radical reforms since the Attlee government.

And Obama couldn’t be any more un-Ronald Reagan-like if he tried. He’s trying to take America in the opposite direction that David Cameron is trying to take the UK. Cameron is trying to decentralize while Obama is trying to centralize. Especially health care.

Poor Quality, High Cost and Rationing in the National Health Service

The National Health Service in the UK has high costs and quality concerns. The costs have been addressed in the past by rationing services. The quality concerns have been addressed by layers of bureaucracy that have often been the original cause of the quality concern.

The problem with the NHS is size. It’s a behemoth. And because of that, it has layers of bureaucracy. Which results in bureaucrats making decisions for patients instead of doctors. They’re trying to change all this by grouping together and empowering local general practitioners (GPs) into consortia (see Hospitals shake-up essential, says King’s Fund by Nick Triggle posted 3/2/2011 on the UK’s BBC).

The government has protected the NHS budget by giving it small above-inflation budget rises over the next four years.

But the report said it was still entering a “cold climate” because demands and costs were outstripping the settlement.

It said without change there could be a “downward” spiral of falling income, growing deficit and declining quality.

Will this fix all the woes of the NHS?

Scandals such as Mid Staffordshire, where an official report found hundreds of patients died needlessly because of poor care, could not be ruled out.

Probably not. But it’s a step in the right direction. For the patients, at least.

A Department of Health spokesman said GP consortia would strengthen the ability of the NHS to make the right decisions.

“We urgently need to modernise the NHS – that is why our plans include many measures to make services more responsive to patients and to consistently drive up quality.”

The key to good health care has always been the doctor patient relationship. The more people that get in between the doctor and the patient the poorer the health care gets. Because the focus shifts from quality to cost efficiency.

This is a step in the right direction, but it’s still a heavy bureaucracy. There is another way to ensure quality, though. Competition. When my dad had his first heart attack the paramedics gave us a choice of two hospitals they could take him to. One had a bad reputation. The other didn’t. We chose the one with the good reputation.

That other hospital continued to do poorly for years and eventually had financial troubles. Then a big hospital bought it and brought it up to their standards. And many years later, both of these hospitals are now providing quality care. You see, competition makes everything better. Even health care.

Using High-Fructose Corn Syrup instead of Sugar making us Obese?

The British and Americans have something else in common. We like our sweets. While one of us loses their teeth to this indulgence, the other has gotten obese (see The Fight Over High-Fructose Corn Syrup by Sharon Begley posted 2/28/2011 on The Daily Beast).

Now a stream of studies shows that sugar and corn sweeteners differ in important ways, including how they affect the appetite-control centers in the brain. That suggests that [High-Fructose Corn Syrup] HFCS may be partly responsible for the obesity epidemic…

The new study is too small to decide the question—it included only nine people—but it fits with other research on both humans and lab animals. Scientists led by Jonathan Purnell of Oregon Health & Science University gave fructose, glucose, or salt water to volunteers and then measured brain activity with functional MRI scans. Over several regions of the cortex, activity increased in people given glucose but decreased in those given fructose, the scientists will report in Diabetes, Obesity and Metabolism. Cortical regions that responded differently included the orbital prefrontal, a key player in the reward circuit, and regions that process the pleasurable effects of food. “It’s evidence that fructose and glucose elicit opposite responses in the human brain,” says Purnell…

Rats eating equal calories from the two gained significantly more weight on HFCS than on table sugar, scientists led by Bart Hoebel of Princeton reported in 2010. The HFCS-fed animals also had increases in abdominal fat and triglycerides. And in a 2010 review, scientists at the University of California, Davis, noted that, in people, fructose added to abdominal fat and other measures “associated with increased risk for cardiovascular disease and type 2 diabetes.” HFCS is not the sole culprit in obesity. But the body and brain don’t seem to treat it as an innocent bystander, either.

Great Britain’s early Caribbean colonial possessions sent shiploads of cane sugar back to England for their tea. And to make their chocolates. They so liked their sweets. And, as a consequence of this sugary indulgence, their bad teeth are legendary in the world of dental hygiene. George Harrison even wrote a song about a fellow Brit with a chocolate addiction. Eric Clapton. Who he warned that he’ll have to have all his teeth pulled out after the Savoy Truffle (a song on the Beatles‘ White Album).

So the British are the butt of many a dental hygiene joke. But they aren’t obese. Like the Americans are. Who also have a sweet tooth. But we don’t eat sugar. We eat HFCS. Why? Not because we prefer it. But because of our government. Big Corn lobbies Congress for sugar tariffs. And Congress delivers. Which makes imported sugar more expensive than HFCS. So we eat HFCS not by choice. But by government fiat. And it now appears it may be part of the cause for the explosion in obesity and diabetes in America. How about that?

Yet another reason to keep government bureaucrats out of our health care system.

Conservatism Works every time it’s Tried

Bureaucrats are good at shuffling paper. They aren’t good research scientists. Or doctors. So it’s best to keep them shuffling paper. And let the professionals determine what we should eat. What we probably shouldn’t eat. And take care of us when we get sick. I’m sure we’d all live a longer and healthier life if we do.

The dynamic duo of Margaret Thatcher and Ronald Reagan knew this. Their conservatism worked. It made the UK and the US great again. And this is why everyone bends over backwards to show how much they are like these great conservatives from our past. Even those who couldn’t be more opposed to their philosophy. Because they know that conservatism works and has worked every time it’s been tried. And they’re willing to admit that (a little) at election time. Even if they’re lying through their teeth. That is, if they haven’t been pulled out yet after the Savoy Truffle.